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Saving enough to pay stamp duty adds to the overall difficulty of buying a home

Andrew McPhillips

The tax – paid from already taxed income for simply changing your address – is charged when people buy a home.

Currently nothing is paid if he property bought is less than £125,000, but two per cent is charged on the portion up to £250,000.

Five per cent is then charged up to £925,000, 10 per cent up to £1.5m and 12 per cent on anything above that.

So a house bought for £275,000 comes with a bill of £3,750 made up of zero per cent on the first £125,000, then two per cent on the next £125,000, equaling £2,500 and five per cent (or £1,250) on the final £25,000.

Now the Yorkshire is calling on the Chancellor to swap the payment of the tax from the buyer to the seller in tomorrow’s Autumn Statement.

The Society estimates such a reform would save first-time buyers in the UK excluding Scotland, an average of £3,791, with Londoners saving the most at an average of £13,171.

But other experts, such as the TaxPayers’ Alliance would like to see the tax scrapped completely.

John O’Connell, chief executive of the TaxPayers’ Alliance, said:

“Stamp Duty is a bad tax which not only distorts the housing market by adding an extra cost on already unmanageably high house prices but also affects labour mobility by preventing people from taking up jobs across the country, worsening our productivity as a nation.

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“As it is now clear that the new reforms introduced by the previous Chancellor only worsened the matter with added complexities while only raising half as much money as the Treasury predicted, Phillip Hammond must do the right thing and abolish this pernicious tax in the Autumn Statement.”

Almost two in three aspiring homeowners would be more likely to buy if they didn’t have to pay stamp duty, according to the UK’s second largest building society.

Sixty per cent of aspiring homeowners said paying no stamp duty would make them more likely to move, with 22 per cent saying it would not make a difference and the remaining 18 per cent answering ‘don’t know’.

The research showed that 18 per cent of potential first time buyers were not saving anything towards buying a home, and a further 52 per cent saving less than £250 per month.

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More than half first time buyers would be more likely to buy a home if stamp duty was axed

The Society argues this highlights the significance of stamp duty acting as a barrier to people achieving their homeownership aspirations.

It has urged the Government to include examining the switch in stamp duty as part of its formal submission on what should be included in Mr Hammond’s financial plans for the UK.

“It’s hard enough for buyers to find the right property in the right location without the need to pay additional fees and taxes, given the scale of house price inflation in recent years.

“The Government’s Housing White Paper will rightly outline plans to resolve the crisis faced by those unable to buy a home.

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Paying stamp duty was more difficult than raising a deposit for 69% of respondents

“But these will be long-term ambitions and measures to ease the problems in the short-term, including reforming stamp duty, should form part of the Government’s strategy.

“Reducing any of the costs such as stamp duty for first time buyers and those moving up the ladder would help to make homes more affordable for many, enabling more people to realise their homeownership aspirations.”

According to another new study, the Chancellor needs to cut the housing tax to stop the North continuing to suffer a “brain drain” as high-skilled British workers leave the region in their thousands.

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Chancellor Phillip Hammond has been called to scrap the 'pernicious' tax

The Homes for the North report found that over the past decade the North has suffered an exodus of 310,000 highly qualified British workers with just 235,000 moving the opposite way.

The deficit suggests around 7,500 highly qualified British workers leave the region every year.

The group, made up of 19 housing associations which provide homes to a million people, want a better housing offer for graduates to help stem the flow and want to see the stamp duty threshold raised to £350,000.